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Plaintiffs’ class action securities filings set record: Cornerstone

Posted On: Jan. 29, 2020 3:08 PM CST

class action

Plaintiffs filed 428 new class action securities cases in federal and state courts in 2019, which was the most on record and nearly double the 1997-2018 average, says a report issued Wednesday.

This compares with the 420 issued in 2018, according to the report by San Francisco-based Cornerstone Research Inc. and the Stanford Law School Securities Class Action Clearinghouse in Stanford, California.

“Core filings,” which exclude merger and acquisition-related filings, rose to the highest number on record, at 268 for 2019, vs. 238 for 2018, according to the report.

“In 2019, the likelihood of litigation involving a core filing for U.S. exchange-listed companies increased for a seventh consecutive year,” said the report.

“This measure reached record levels because of both the heightened filing activity against public companies and an extended decline in the number of public companies over the last 15 years,” it said. 

In 2019, 5.5% of U.S. exchange-listed companies were the subject of core filings, according to the report.

The courts where litigation was most frequently filed were within the New York-based 2nd U.S. Circuit Court of Appeals and the San Francisco-based 9th U.S. Circuit Court of Appeals, at 103 and 52 core federal filings, respectively, the report said.

Filings within the 3rd U.S. Circuit Court of Appeals “remained at elevated levels,” with the 28 cases filed in 2019 compared with the 1997-2018 historical average of 17, the report said.

The report also said that beginning in the latter part of 2018, companies with cannabis industry connections were increasingly the target of federal class action filings, with six core federal filings involving companies selling cannabis or cannabidiol products filed in 2018, and 13 in 2019.

Plaintiffs filed 198 new federal class action securities lawsuits in this year’s first half, one fewer than the total filed for the comparable period a year ago, according to the Cornerstone report issued in July.